Five Key Steps for Effective Invoice Payment Processing

Without a centralized, structured data trail, it becomes difficult to track pending payments, forecast cash flow, or support audit requests. While most invoice coding systems aren’t nearly that complicated, even simple systems can slow the accounts payable process as a company expands, adding new departments and locations to the list. But the most common use of invoice coding, especially for accounting teams, is to track the department, account, or location that’s responsible for incoming bills. This account coding helps them allocate vendor payments to the right internal budgets. It automatically extracts information from invoices, saving time, enhancing accuracy, and cutting down error chances. An invoice automation software is a tool that effectively eliminates the need for manual data entry during your Accounts Payable process.

Do away with manual data entry

• With proper coding, each invoice becomes a structured financial data point that integrates cleanly with the broader accounting system.
• Once the integration points are identified, the next step is to communicate the changes to all relevant stakeholders.
• The codes help you break down expenses in a way that makes sense for your business.
• For automation to be successful, employees need to understand and embrace the new system.
• Businesses should prioritize platforms with AI-driven data capture, customizable approval workflows, and advanced analytics to maximize efficiency.
• From there, the invoice processing software automatically scans the invoices, enters the invoice data into an accounting system or ERP, codes the invoice details, and matches the invoices to purchase orders.

Fast and efficient resolution of discrepancies ensures that your payment cycles remain uninterrupted. With streamlined approval processes, you can experience faster decision-making and turnaround times, allowing your team to focus on strategic initiatives instead of getting bogged down by exceptions. Without automation, companies can’t track invoices in real-time, which might lead to cash flow problems and missed payments. Not being able to quickly fix errors can result in late fees and strain relationships with vendors. The result is a highly efficient process that saves time, improves accuracy, and ensures compliance with financial policies. Automation is particularly advantageous for businesses handling large volumes of invoices, offering scalability and cost-effectiveness.

Lower operational costs

According to research by Ardent Partners, top businesses with fully automated invoice processing systems can save what is invoice coding up to 78.71%. Efficient invoice payment processing is crucial for maintaining healthy cash flow and vendor relationships. And by using the 5 steps in the invoice payment process we’ve outlined, you’ll be able to ensure the company’s overall financial stability.

Explaining the General Ledger Chart of Accounts

Any software you bring into a business should have a clear and easily understandable return on investment. But you still have to establish what KPIs (key performance indicators) are most important to your business. Document what the KPIs are, and measure them on a specific cadence to show ROI and ensure the successful adoption and rollout of the software. Enhanced efficiency and touchless processingAutomation significantly accelerates the invoice processing cycle, reducing the need for manual intervention. This increase in efficiency allows staff to focus on higher-value tasks instead of routine data entry.

ROI and Cost Benefits of Automating GL Coding of Invoices

By leveraging automation and adopting the right software solutions, AP departments can significantly improve their invoice processing workflows. Invoice processing is often performed with software and it is commonly referred to as automated invoice processing or invoice automation for short. An invoice processing flowchart is a structured guide detailing the steps for how accounts payable is to process vendor invoices. This approach replaces time-consuming manual processes with intelligent, system-driven workflows that streamline accounts payable operations. Invoice processing refers to the tasks and procedures performed by AP departments to ensure that invoices received from suppliers and vendors are accurate, approved, and paid on time.

• Hands-on training sessions are invaluable for helping staff become comfortable with the new tools.
• Invoice coding is the process of adding information to an invoice using a system of unique codes.
• Invoices play a critical role in the bill payments and wider accounting process.
• Businesses can benefit from faster payment processing with automated invoices as it leads to quicker invoice approvals, resulting in improved cash flow and timely payments.
• Invoice automation software helps you reduce invoice processing costs, enhance visibility into payments, strengthen vendor relationships, and gain better control over cash flow.

Key features to look for in invoice coding automation tools

In some cases, your business may choose to pay an invoice early to take advantage of a discount. It must handle growing invoice volumes and support various currencies and payment types without major changes. Ensure the software integrates easily with your existing systems like ERP and accounting platforms. Being adaptable means regularly reviewing new tools and adjusting workflows to meet evolving business needs.

Cost center or project coding

• Using a standardized general ledger (GL) coding structure for all departments is fruitful.
• To understand invoice coding more clearly, let’s walk through a simple example of how a typical supplier invoice is coded within an accounts payable system.
• However, the process can vary depending on whether you’re coding an invoice with or without a purchase order (PO).
• It extracts key information like invoice numbers, dates, and vendor details from digital or scanned invoices.
• A better system can lead to professional benefits when engaging with a vendor, as it’s easier to guarantee the bills are paid when due.
• In this blog, we get into how OCR can transform how your business handles invoice processing.

Instead of relying on paper-based workflows and fragmented systems, finance teams gain real-time visibility, reduce manual errors, and accelerate payment cycles. With automation, invoices move seamlessly through predefined workflows, ensuring accuracy and compliance while freeing finance professionals to focus on higher-value tasks. Accuracy and complianceInvoice automation solutions improve the accuracy of data entry and ensure compliance with regulatory standards by minimizing human error. The use of technologies like OCR and AI ensures that data captured from invoices is precise, which is critical for compliance and financial reporting.

How Cloud-Based Invoice Coding Gets Smarter All the Time

Checking if the automation software provides additional features that ensure smooth and effective implementation pays off. The AP manager must compare all the features of software available in the market before deciding. Automation software that is complex to install or implement is not value for money. A smaller team Online Bookkeeping can afford steep learning curves for mastering the use of sophisticated software, while a large team would require simple automation software.

AP cards

By moving away from paper invoices and manual coding actions with automated invoice processing, companies can save time, save money, and minimize discrepancies by reducing the risk of human error. Invoice automation software helps you reduce invoice processing costs, enhance visibility into payments, strengthen vendor relationships, and QuickBooks gain better control over cash flow. Is your accounts payable (AP) team still spending hours on manual tasks like invoice data entry, chasing down approvals, and correcting errors?